Should I Invest My Money?
Typical financial advise out there suggests that you should start investing your money as early as possible. Their reasoning is, that when you are young, you will have more time for those investments to grow and you are more able to take on the risks associated with investing, because if you do end up loosing it all early on, then you will have time to recover before you get too old. This makes sense at surface level, but when you really look into it, this isn’t very good reasoning.
When you are young you do want to start doing something with your money to earn a return on it. This allows your money to start compounding as early as possible. The more time that your money has to compound, the more dramatically it will grow! But then typical financial advise tells you to take on the risks of the market, because if you end up loosing your money, it’s not too late to start over. Well starting over is exactly what you DON’T want to do if you are trying to take advantage of the compounding of your money… It’s the early years in the compounding process that takes a long time for you to see much of a difference. The later years are where you see HUGE gains when compounding money. So if you start over after a few years or more of failed investments, then you are missing out on what could be the most money you’ll ever make in your later years of life.
The stock market sees similar stopping and starting over, all the time. Over time you do see a steady gain in the market, but you don’t get the same potentially huge gains when your money is truly compounding. With the market, you may make some big gains in some years, but also big losses in other years. It takes much more time and money to recover every time you experience a loss, which frequently happens in the market. The market is like the hare in the classic story of the tortoise and the hare (the hare does not win the race).
Does this mean we suggest that you shouldn’t invest? On the contrary, not at all. Taking on the risks of the market can gain you a lot of profit, especially if you take the time to study and really know what you are investing in. We just don’t think it should be the first things you should do with your money (more on that later).
We think investing is definitely something that should be done, but only if you really take the time to understand what you are investing in, and only after you have built up a protection, savings and debt management with your money first. The potential to earn large gains in the short term can really enhance your financial portfolio.
There are many things to choose from for investment purposes as well. You can invest in the stock market, in your own business, in real estate and much more. Some investments can set you up for earning passive income, like renting out property, building a large company, or writing a book, which can slowly bring you to true financial freedom. If you can create enough passively generated income to support your living expenses, then you can spend all of your time working on things that you are passionate about, rather then being a slave to making a paycheck for the rest of your life.
Why Participating Whole Life Insurance Is The Best Place To Start?
Earlier we talked about starting to compound your money as early as possible to take full advantage of the HUGE gains that are possible in the later years of your money compounding. Participating Whole Life Insurance is the best place to do this! You see, purchasing this kind of life insurance is not actually considered an investment, it is considered and asset purchase, because you are purchasing a death benefit, and there is no risk, because your money is not in the market. Unlike Universal Life Insurance, your money is not invested in the market with Whole Life. Your money is growing with the life insurance company as it grows, because you as a policy holder are part owner in the company. The contracts that are written for Participating Whole Life policies are GUARANTEED to consistently grow your money compounding for the rest of your life. When these policies mature, you’ll start to see those HUGE gains that comes with compounding money. You can’t get that anywhere else!
Once you have gotten the guaranteed protection of your money with Participating Whole Life Insurance and the compounding effect going of your hard earned savings, then you should work on managing your debt. This means paying off any bad debt (debt that is costing you money) and obtaining good debt (debt that is making you money). Once these things are in place, then it is a good decision to start investing your money to see if you can earn a higher rate of return on it.
Standard financial advise like we talked about earlier, would be having you do this backwards. If you started out by investing your money, even if it is a more conservative investment, you are at 100% risk of loosing all of your money. That is just the nature of the market, you don’t know what it is going to do. Once people have their money tied up in investments, they try to use their profits from those investments to start paying off debt. Once they have their debt paid off, they then start to save their money they are earning. After that, if it is not already too late because they spent most of their life getting to this point, they decide to protect it by purchasing insurance. But when the market starts to get shaky and has a down turn, because the basis of all of what they have done was founded in their investments, their protection falls apart, along with their savings. They obtain more debt to try to stay afloat, and all they have is whatever is left of their investments. After spending a large portion of their life building up their money in this way, they now have to start over, or at the very least, take a big step back.
It is best to start with a solid foundation of guaranteed protection for your money, then build your savings where it will continue to earn compounding interest, pay off your bad debt and manage any good debt you have, then start to invest your money where you may be able to get a higher rate of return. Structuring your finances in this manor will allow you to be able to weather any storm that may come without falling apart.
Let us help you make the right financial decisions for your future by contacting us